Buying a home is a major financial commitment, and one of the first steps you should take is to get pre-approved for a mortgage. Pre-approval is a process where a lender assesses your financial situation and determines how much money they are willing to lend you for a home purchase. In this week's update, we will explore why it’s a good idea to be pre-approved before you go house shopping, and what you will need in order to secure a pre-approved home loan.
The Benefits of a Pre-Approval
Know Your Home Buying Budget
One of the biggest advantages of having a pre-approval is that it gives you a clear understanding of your budget. With a pre-approved loan amount in hand, you can confidently search for properties within your price range, saving you time and avoiding disappointment.
Competitive Advantage
Having a pre-approved loan puts you in a stronger position and enables you to move quickly when making an offer on a property. Real estate agents and sellers consider pre-approved buyers as serious and reliable, giving you an advantage over other potential buyers.
Faster Process
When you find a property that you want to purchase, you won't have to wait for the lender to go through the full application process, as much of the groundwork has already been done. They just need to sign off on the property you are looking to purchase and clear up any remaining conditions on the pre approval. You just need to make sure you purchase a property within the timeframe that the approval is valid for. Most banks will give you 3-6 months before they need to re-assess your application again.
Auction Bidding
If you plan to purchase a property at auction, then having a pre-approval is essential. Auction bids are unconditional, meaning you need to have your finance arranged beforehand. By having an unconditional pre-approval, you can confidently bid without worrying about the financing aspect.
How to Obtain a Successful Pre-Approval
To obtain a pre-approval, you'll need to provide certain documents and information along with your application to the lender. While the exact requirements may vary between lenders, here are some common documents you will most likely need:
The lender will also run a credit check, so it's a good idea to have a look over your credit report beforehand. You can do this via websites like Centrix, Equifax or ClearScore.
How A Mortgage Adviser Can Help
A Mortgage Adviser understands the complexities of the mortgage market and can provide valuable assistance in securing a pre-approved home loan. With access to a panel of over 20 Lenders, we can guide you through the application process helping you get together all the necessary information so it can proceed smoothly and efficiently.
Even if you have been declined or told it may be challenging to get a pre-approval directly from your bank, a Mortgage Adviser can help present a thorough application that highlights your strengths and mitigates any weaknesses to try and turn it around for you.
In recent months towards the end of 2024, many banks (due to being so busy) had even stopped doing pre-approvals for new-to-bank customers, which meant if your own bank wouldn’t approve you, you were limited for choice. As a result, if you’re looking at purchasing, getting pre-approved now while banks are offering pre-approvals is even more important!
So reach out if you are looking to buy a property in 2025, and we can get the ball rolling for you!